Handling 401(k) Hardship Withdrawal Requests After a Disaster"[I]t is certainly possible for a hardship distribution to be obtained to address a need brought about by damage or loss of a residence due to the hurricane. However, it is important to read your plan document to determine if such a provision is included in your plan."
(PLANSPONSOR.com)

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Are Additional Contributions Right for Your Company's DB Plan? (PDF)"[D]espite lower minimum required contributions, this could be a compelling time for corporations to use voluntary contributions to strengthen their plan's funded status, while receiving an attractive economic return on investment compared with other uses of capital."
(UBS Global Asset Management)

Public Pension Funds Face Vast Shortfall"If you are among the more than 27 million current or former state or local government workers in this country, it might be time to contemplate how to generate some extra income or cut costs to meet your living expenses. That's because a small but growing number of the nearly 3,418 state and local pension plan systems are starting to make big changes to address a $1.4 trillion shortfall."
(MarketWatch.com)

Employees Need to Aggressively Increase Their 401(k) Contributions"We're living longer than our money. Generations ago, this wasn't the case. People retired at age 65 and lived for another decade, in relative comfort, on Social Security and their company pension. Company pensions are now rare, and two things that just about everybody could agree upon are that Social Security is (1) not enough to live on (more on this below), and (2) is unlikely to be more generous in the future than it is today."
(MarketWatch.com)

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How Well Did 401(k) Plans Weather the Great Recession?"Despite economic difficulties, access to retirement savings plans increased over the past five years. The percentage of employers offering 401(k) plans rose from 72% in 2007 to 82% in 2012. During the same five-year period, the number of companies offering traditional defined-benefit pension plans decreased from 19% in 2007 to 16% in 2012."
(Investment News; free registration required)

Record Retention Requirements for Retirement Plan Sponsors"ERISA sets forth specific reporting and disclosure obligations with respect to qualified retirement plans. A lesser-known fact is that ERISA also requires retirement plan sponsors to retain records that support information included in Form 5500 filings and other reports and disclosures for a certain period."
(Baden Retirement Plan Services)

PBGC Director Says New Regs Needed for Multiemployer Plans"Speaking at [a recent conference, PBGC Director Joshua] Gotbaum noted that active employees are now the minority in multiemployer plans. On average, active employees account for 40% of the multiemployer plan population, and in some plans the proportion of active employees is as low as 10%."
(PLANSPONSOR.com)

A 401(k) That Promises Income for Life"While anything resembling your father's pension is unlikely to return, one large company has overhauled its 401(k) plan so workers can receive a paycheck for life.... In fact, the plan is one of the first by a large employer to include annuities within the walls of its 401(k), specialists say. And in an even bolder move, the company is automatically enrolling employees into the program if they do not select other options on their own."
(The New York Times; free registration required)

Financial Stability Oversight Council Seeks Comments on Proposed Rules for Stabilizing Money Market Funds"An advisory committee organized under the Treasury Department on Tuesday voted unanimously to move forward with a set of proposed rules intended to stabilize money-market funds and prevent a run on assets similar to the jolt the market experienced during the financial collapse of 2008 and 2009. The Financial Stability Oversight Council (FSOC) moved the set of three proposals to the next stage in its administrative process, asking for public comment on the proposed rules that the Securities and Exchange Commission would ultimately draft and enforce."
(On Wall Street)

Weathering the Economic Storm: Retirement Plans in the United States, 2007-2012 (PDF)"Unlike more extreme cost-cutting measures (e.g., downsizing, layoffs), retirement benefits have remained relatively intact with the notable exception that the number of companies that offer defined benefit plans or 'traditional pension plans' declined from 19 percent (2007) to 16 percent (2012). The survey found these encouraging indicators: The vast majority of employers, at 82 percent (2012), consider a retirement plan an important benefit for attracting and retaining employees; Employers offering a 401(k), or similar plan has increased from 72 percent (2007) to 82 percent (2012)[.]"
(Transamerica Center for Retirement Studies)

IRS and PBGC Provide MAP-21 Guidance for Single-Employer Defined Benefit Plans (PDF)"Plan sponsors ... will need to decide whether to apply the MAP-21 segment rates to the 2012 plan year or defer until 2013. If they have previously elected to reduce a credit balance for the 2012 plan year, they must decide whether to reverse that election. Finally, if they sponsor a cash balance plan that uses segment rates for interest crediting purposes, they must decide whether or not to apply the MAP-21 segment rates."
(Prudential)

Student Loans Crushing Hopes for Some Near-Retirees"People 60-plus now hold the dubious distinction of being in the fastest-growing age group for college debt, according to The New York Times. In the first quarter of this year, some 2.2 student loan borrowers were age 60 and older, a three-fold increase from 2005. Together, they owed $43 billion in student loans."
(AARP)

Projected Postal Service Pension Surplus Shrinks"The projected excess in the $412 billion Federal Employees Retirement System, Washington, for benefits covering about 471,000 current postal employees shrank to $2.6 billion from $10.9 billion a year earlier ... The lower estimated pension surplus adds to the financial woes of the Postal Service ... The service skipped two payments due to the U.S. Treasury totaling $11.2 billion for health benefits of future retirees, saying it couldn't afford them."
(Pensions & Investments)

[Opinion]

Financial Stability Oversight Council Fails to Advance the Money Market Funds Debate"Regrettably, today's action by the [Financial Stability Oversight Council, or 'FSOC'] fails to advance the debate over how to make money market funds more resilient in the face of financial crisis. The Council apparently is proposing to send back to the [SEC] the very same concepts that a majority of the Commission's members declined to issue for public comment in August. The process that the FSOC is following is deeply flawed."
(Investment Company Institute)

[Opinion]

Ten Reasons to Doubt PBGC's Reported Deficit (PDF)"(1) Almost 80% of the [PBGC] self-reported deficit is directly attributable to the current historically low interest rates.... (2) Much, if not all, of the remaining 20% of the deficit results from PBGC using an interest rate that is materially lower than the rates employer-sponsored plans are required to use by [FASB] ... (3) A point-in-time picture of a long term obligation like pension payments inevitably gives a skewed perspective." [And 7 more.]
(American Benefits Council)

Benefits in General; Executive Compensation

Many Adults Caring for Elderly Parents Say They'll Tap Retirement Savings to Help Their Parents Financially (PDF)"Many Americans are behind when it comes to saving for retirement, and caregivers are no exception.... The majority of caregivers in this survey (84%) were over the age of 45.... [T]wo-in-five caregivers (43%) felt their parents had not saved enough money for retirement. The majority (65%) felt they were in the same boat as their parents and were not saving enough for their own retirement. And nearly one-third (31%) felt they would have to dip into their own retirement savings to help their parents retire."
(eHealth)

Circuits/IRS Split When It Comes to FICA Taxation of Severance Pay"Despite a Circuit conflict, the IRS continues to assert that all severance payments are wages subject to FICA taxation, unless they meet the narrowly-tailored definition of 'supplemental unemployment benefits' under existing IRS guidance. Such benefits are defined as payments on account of an employee's involuntary separation from employment that results directly from a reduction in force, the discontinuance of a plant or other similar conditions. In addition, the IRS requires that such severance payments not be made as a lump sum and specifically be designed to supplement state unemployment benefits that the individual is eligible to receive."
(Bloomberg BNA)

Employment and Benefits Issues in the Wake of Hurricane Sandy"In the wake of Hurricane Sandy, employers with employees and operations on the East Coast face a myriad of questions regarding how to handle weather-related closures of their facilities, business disruptions, and evacuation and displacement of numerous workers and their families from their homes. Generous employers are also considering ways to assist those affected by the storm. The effect of a storm closure on employment requirements varies for different types of employees and also varies by state."
(Proskauer Rose LLP)

Approval of Washington State's Marriage Equality Act and Its Impact on Employee Benefits"Employers should now assess the impact of the [Washington State] Marriage Equality Act on their employee benefit plans and procedures (which should already have been reviewed and revised to ensure compliance with the 'everything but marriage' law). This advisory revisits the employee benefits compliance issues that arose from 'everything but marriage' and addresses additional benefits issues arising from the Marriage Equality Act."
(Davis Wright Tremaine LLP)

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